If anyone here is a real estate agent, I’d like your thoughts on presenting offers on foreclosure properties that are listed in the MLS. I’m wondering if I should take the time to talk to the agent about it first, or just write it up, have the agent present the offer to the seller, and explain later. What do you think?
I’m not an agent, but I may be able to help answer the question.
First, though, are you talking about pre-foreclosures or REO? And are you an agent yourself? And if you’re an agent, are you talking about writing up offers for your clients or for yourself?
Sorry, I should’ve been clear: I am a real estate agent, and I want to invest in preforeclosures I see listed on the MLS.
I would talk to the agent and present it as follows:
I need to discuss the sale directly with the owner, the agent can be present if he likes (he probably should). What I am mainly interested in is buying it on owner finance with the back payments as my down payment. Being a preforeclosure, time is short and I am probably the seller’s best option because I can move quick and the agent should not block a sale on a preforeclosure because of the poor seller… Since the seller’s agent expects a commission, I will pay him 1-2% to release the listing contract and allow me to close on it myself quickly.
I have to think that there’s an issue with two Realtors being involved in a sale where a violation of the due on sale clause exists.
Also, who will close the deal? I can do kitchen table settlements all day with just me and the owner, but a seller with a Realtor is probably looking for a more traditional settlement, no?
Seems like you’re risking your license, aren’t you? If the seller decides they don’t like the idea that their loan wasn’t paid off, couldn’t that come back to haunt you?
As long as everything is disclosed to the seller (which I always do in plain language in all my docs), there’s no risk to losing the license.
I’m sure you know better as it’s your business, but it seems to me that you should not be able to just “disclose” your way out of entering into a transaction knowing that you’re violating the seller’s security agreement. I would think that licensed agents are held to a higher standard.
I’m assuming you’ve asked your broker about it and s/he is OK with it. And if you’re a Realtor (which you may not be even though you’re an agent), then I assume you’ve checked with NAR that this is all OK, too.
I’d be interested to know that they are OK with this.
its not a violation though. it is just a right the lender has
Be careful and make sure your broker allows it. Many brokers such as Prudential limit the activities of their agents in certain ways.
I’m pretty sure NAR OK’ed realtor involvement in sub2’s. Your own broker might be a different story though.
If NAR didn’t explicitly approve of “subject to” deals, then they sure did it implcitly right here:
http://www.realtor.org/prodser.nsf/OpenProd?OpenForm&IN=141-170
I guess they are OK with it!
The due-on-sale clause is part of a contract, not a law to be violated. It doesn’t affect the license in any way.
But back to the original question, any agents here have experience making sub2 offers themselves? If so, please share your observations. Thanks!
Not an agent, but I think it’s safe to say that you’re not going to have much luck making sub2 offers on listed homes. You have to remember that the vast majority of agents know nothing about creative investment and they would rather let their listing expire than get involved in anything out of the norm.
Your best option would be to contact expired listings. While every other agent is trying to list them, you can stand out from the crowd as the only agent who wants to BUY!
If you REALLY want to make an offer while it’s listed with another agent then your first order of business is to get the listing agent on your side. Without their openness to the sub2 concept (or any other creative purchase technique for that matter) you won’t get anywhere with the seller. Sure you might be able to convince the seller, but the LA will talk them out of it as soon as you leave the room. After all the seller trusts their agent a lot more than they trust you at that stage in the game.
In the early years of my investment career I believed that working with agents to buy creatively was possible. I mean it all made so much sense to me! I could solve their client’s problem, save at least part if not all of their commission, and they would look like heros to the community for being able to find a buyer for nearly every house they list. Well, that was what I thought. So off I went making offers on every house that looked like a good candidate.
Hundreds of offers later without a single acceptance I finally had to admit complete and utter defeat. Agents didn’t have the deals I wanted.
In the years since then I occasionally test the waters to see if the new generation of agents is any different. Some agent who claims to work with investors or who is new and hungry for business will contact me and promise the world about how they understand my investment requirements and will find me more deals than I can handle. Without fail they either never send me a single lead, or they send a bunch of crap I have no interest in, despite my clear instructions.